Apple's Growth Machine Is Slowing. High Prices Might Not Save It

Apple’s September-quarter revenue rose 12%, slightly beating Wall Street forecasts, as companywide price increases helped offset soaring memory and storage costs. Gross margin reached 47.9%, also narrowly exceeding estimates, but Apple’s outlook points to weaker momentum: services growth is expected to slow further and gross margin to decline. The company is using up inventory of cheaper components, increasing its exposure to higher costs. Investors pushed the stock down after hearing the forecast. New CEO John Ternus, who took over in September, must sustain growth while facing high expectations built by Steve Jobs and Tim Cook.

The $1,999 foldable iPhone Duo is a rare bright spot: demand has outstripped supply, with delivery estimates extending to January despite mixed reviews. But higher prices may not persuade customers to upgrade without more compelling features, and Apple’s AI offering, Siri AI, appears behind competing assistants that can handle multistep tasks. Services, once a dependable growth engine, faces pressure from court and regulatory limits on App Store fees; OpenAI has also directed some ChatGPT subscribers to pay on its website instead. Apple trades at about 36 times expected earnings despite forecasts for just 1% growth, leaving little room for disappointment. Its reputation for stability and cash returns may not protect its premium valuation unless Ternus revives innovation and sales.